Stamp Duty - can I avoid?

RJRock

I part own one third of a property gifted by deed to me by my father 15 years ago. He still lives in the property.

My family and I now live in the property with him, having recently sold our previous house.

I had agreed prior to moving in, to buy out my two sisters share (2/3) - we agreed a price which I fully intend to honour.

The price was to be 67500 to each sister - or £135k total.

Not having done my Stamp Duty research it appears we are £10k over the threshold.

My sisters have two daughters each, can I gift my nieces £2.5k each thus dropping the sale price to £125k, avoiding SD at 1%. Or could I just give my sisters and spouses 2.5k each?

My wife and I are both recently out of work and could do with saving where we can hence the question.

Any help really appreciated.

CLAPTON

have you considered the capital gains tax aspects of the situation?

k12479

RJRock wrote: »

gifted by deed to me by my father... He still lives in the property.

Sounds like this may have inheritance tax implications as a gift with reservation.

RJRock

k12479 wrote: »

Sounds like this may have inheritance tax implications as a gift with reservation.

A third share 15 years ago would attract Inheritance Tax?

RJRock

CLAPTON wrote: »

have you considered the capital gains tax aspects of the situation?

Unsure how CGT applies when I'm not selling my share gifted 15 years ago?

k12479

RJRock wrote: »

A third share 15 years ago would attract Inheritance Tax?

In no expert in this, but I assume the whole house would be, not just the third share. Unless your father has been paying market rent to stay in the house for the last 15 years, then it could be an issue.

Have a search on google for "iht gift with reservation", or await someone with more knowledge to post.

GhIFA

Your sisters may have a CGT liability for their respective shares.

As the previous poster says, if a Market Rent hasn't been paid then this quite likely to be a "Gift with Reservation of Benefit" and therefore taken into account for IHT purposes, potentially giving rise to further tax on his death.

RJRock

GhIFA wrote: »

Your sisters may have a CGT liability for their respective shares.

As the previous poster says, if a Market Rent hasn't been paid then this quite likely to be a "Gift with Reservation of Benefit" and therefore taken into account for IHT purposes, potentially giving rise to further tax on his death.

My father has 'paid' 25 pounds a month to every grandaughter into their savings account- there are 2 each between my sisters and I - started 19 years ago with the oldest, 5 years ago to the youngest. can that be classed as rent?

Mojisola

RJRock wrote: »

My father has 'paid' 25 pounds a month to every grandaughter into their savings account- there are 2 each between my sisters and I - started 19 years ago with the oldest, 5 years ago to the youngest. can that be classed as rent?

Only if the grandchildren are his landlords. Are they complying with the legal duties of a LL?

GhIFA

RJRock wrote: »

My father has 'paid' 25 pounds a month to every grandaughter into their savings account- there are 2 each between my sisters and I - started 19 years ago with the oldest, 5 years ago to the youngest. can that be classed as rent?

It could be considered rent, but whether it would be considered a market rent is another matter, and that is what it would need to be in order for the gift not to be considered one with reservation. However, without wishing to cause more concern, if you decided that these payments are rent, then it should have been being considered for income tax purposes.

Did you get legal advice when the original gift of the property was made?

getmore4less

go back to the start you are going to need to do a lot of research

Why was the house gifted what was the intention was advice taken.

Value at time of gifting

Any money spent on the place who paid.

Who has been living in the house for the last 15 years(you need the dates of all the relevent people)


If your dads total assets(including the full value of the house) are under £325k(potentialy upto £650k) IHT is likely to not be an issue.


The £25pm to the grandkids is this coming out of income or capital?
(ther is a potential IHT issue with this)